COMMUNITY BANKS INC /PA/
S-8, 2000-05-17
NATIONAL COMMERCIAL BANKS
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<PAGE>

       As filed with the Securities and Exchange Commission May 17, 2000

                                                 Registration No.:______________

                          ---------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                          ---------------------------

                                   FORM S-8

            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

                          ---------------------------


                             COMMUNITY BANKS, INC.
                      -----------------------------------
            (Exact Name of Registrant as Specified in its Charter)


                                  Pennsylvania
                    ---------------------------------------
        (State or other jurisdiction of incorporation or organization)

                                     6022
                   -----------------------------------------
               (Primary Standard Industrial Classification No.)

                                  23-2251762
                 --------------------------------------------
                     (I.R.S. Employer Identification No.)


       150 Market Square, Millersburg, Pennsylvania 17061 (717) 692-4781
       -----------------------------------------------------------------
      (Address, including zip code, and telephone number, including area
              code, or registrant's principal executive offices)

                       2000 Directors Stock Option Plan
                       --------------------------------
                             (Full title of plan)


                             EDDIE L. DUNKLEBARGER
                             President and C.E.O.
                             COMMUNITY BANKS, INC.
                               150 Market Square

                Millersburg, Pennsylvania 17061 (717) 692-4781
                ----------------------------------------------
           (Name, address and telephone number of Agent for Service)

                                  Copies to:
                               BRADLEY A. WALKER
                            METTE, EVANS & WOODSIDE
                            3401 North Front Street
                                 P.O. Box 5950
                      Harrisburg, Pennsylvania 17110-0950
<PAGE>

                        CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------

Title of each class of       Amount         Proposed          Proposed                   Amount of
securities to be              to be       maximum offering    maximum                 registration fee
registered                  Registered    price per unit/1/   aggregate offering
                                                              price
- -------------------------------------------------------------------------------------------------------------
<S>                         <C>           <C>                 <C>                     <C>
Common Stock                200,000       $18.75              $3,750,000              $1136.36
Par value
$5.00 per share
</TABLE>

/1/      Estimated solely for the purpose of calculating the registration fee
         pursuant to Rule 457, and based on the average of the high and low
         prices of the Common Stock on May 11, 2000, as reported on the American
         Stock Exchange.

                                    PART II

              INFORMATION REQUIRED IN THE REGISTRATION STATEMENT


Item 3.  Incorporation of Documents by Reference.

          The following documents filed by Community Banks, Inc. (the "Company")
with the SEC, or other governing body as appropriate, are incorporated herein by
reference:

          (1)  The Annual Report of the Company on Form 10-K for its fiscal year
ended December 31, 1999.

          (2)  All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act of 1934 since December 31, 1999.

          (3)  The description of the Company's common stock contained in the
Registration Statement filed with the Board of Governors of the Federal Reserve
System pursuant to Section 12(g) of the Exchange Act of 1934, which Registration
Statement became effective on or about October 7, 1994.

          (4)  All documents subsequently filed by the Company with the SEC
pursuant to Section 13(a), (c), 14 or 15(d) or the Exchange Act of 1934, prior
to the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be part hereof from the date of filing of such documents.

                                      -2-
<PAGE>

Item 4.  Description of Securities.

         Not applicable.

Item 5.  Interests of Named Experts and Counsel.

         Not applicable.

Item 6.  Indemnification of Directors and Officers.

         Sections 1741 and 1742 of the Pennsylvania Business Corporation Law of
1988, as amended (the "BCL") provide that a business corporation may indemnify
directors and officers against liability they may incur as such provided that
the particular person acted in good faith and in a manner he or she reasonably
believed to be in, or not opposed to, the best interests of the corporation and,
with respect to any criminal proceeding, had no reasonable cause to believe his
or her conduct was unlawful. In the case of actions against a director or
officer by or in the right of the corporation, the power to indemnify extends
only to expenses (not judgments and amounts paid in the settlement) and such
power generally does not exist if the person otherwise entitled to
indemnification shall have been adjudged to be liable to the corporation unless
it is judicially determined that, despite the adjudication of liability but in
view of all the circumstances of the case, the person is fairly and reasonably
entitled to indemnification for specified expenses. Under Section 1743 of the
BCL, the Company is required to indemnify directors and officers against
expenses they may incur in defending actions against them in such capacities if
they are successful on the merits or otherwise in the defense of such actions.
Under Section 1745 of the BCL, a corporation may pay the expenses of a director
or officer incurred in defending an action or proceeding in advance of the final
amounts advanced unless it is ultimately determined that such person is entitled
to indemnification from the corporation. Article 12 of the Company's Articles of
Incorporation and Article 20 of the Company's Bylaws provide indemnification of
directors, officers and other agents of the Company and advancement of expenses
to the extent otherwise permitted by the BCL.

         Section 1746 of the BCL grants a corporation broad authority to
indemnify is directors, officers and other agents for liabilities and expenses
incurred in such capacity, except in circumstances where the act or failure to
act giving rise to the claim for indemnification is determined by a court to
have constituted wilful misconduct or recklessness. Article 12 of the Company's
Articles of Incorporation provides that the Company indemnify any and all
persons whom it shall have the power to indemnify for and against any and all
expenses, liabilities or other matters for which indemnification is permitted by
applicable laws.

         Article 20 of the Company's Bylaws conditions any indemnification or
advancement of expenses upon a determination, made in accordance with the
procedures specified in Section 1744 of the BCL, by the Company's directors or
shareholders that indemnification or advancement of expenses is proper because
the director or officer met the standard of conduct set forth in Section 1741 or
1742 of the BCL, as applicable.

         As authorized by Section 1747 of the BCL and Article XIV, the Company
maintains, on behalf of its directors and officers, insurance protection against
certain liabilities arising out of the discharge of their duties, as well as
insurance covering the Company for indemnification payments made to its
directors and officers for certain liabilities. The premiums for such insurance
are paid by the Company.

                                      -3-
<PAGE>

Item 7.  Exemption from Registration Claimed.

         Not Applicable.  No exemption from registration is claimed.

Item 8.  Exhibits.

         4.      2000 Directors Stock Option Plan of the Company.

         5.      Opinion of Mette, Evans & Woodside, General Counsel of the
Company.

         23.a.   Consent of Mette, Evans & Woodside, General Counsel of the
Company - included in Exhibit 5.

         23.b.   Consent of PricewaterhouseCoopers, LLP (Auditors).

         24.     Powers of Attorney included in "SIGNATURES" on page 5.

Item 9.  Undertakings.

1.  The undersigned Registrant hereby undertakes as follows:

(a) to file, during any period in which offers or sales are being made, a post
effective amendment to this Registration Statement:

          (i)   to include any prospectus required by Section 10(a)(3) of the
          Securities Act of 1933;

          (ii)  to reflect in the prospectus any facts or events arising after
          the effective date of the Registration Statement (or the most recent
          post-effective amendment thereof) which, individually or in the
          aggregate, represent a fundamental change in the information set forth
          in the Registration Statement;

          (iii) to include any material information with respect to the plan of
          distribution not previously disclosed in the Registration Statement or
          any material change to such information in the Registration Statement.

(b) that, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

(c) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.

2. The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of such request,
and to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed subsequent
to the effective date of the Registration Statement through the date of
responding to the request.

                                      -4-
<PAGE>

3. The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.

4. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

5. Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.

6. The undersigned Registrant hereby undertakes that for purposes of determining
any liability under the Securities Act of 1933, the information omitted from the
form of prospectus filed as part of a registration statement as permitted by
Rule 430A and contained in the form of prospectus to be filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of the registration statement at the time it was declared
effective.

                                  SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in Millersburg,
Pennsylvania, on May 12, 2000.

                                   COMMUNITY BANKS, INC.

                                   By: /s/ Eddie L. Dunklebarger
                                       --------------------------
                                           Eddie L. Dunklebarger
                                     President and Chief Executive Officer

                                      -5-
<PAGE>

          Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated. Each person whose
signature appears below in so signing also makes, constitutes and appoints Eddie
L. Dunklebarger and Ernest L. Lowe, and each of them acting alone, his true and
lawful attorney-in-fact, with full power of substitution, for him in any and all
capacities, to execute and cause to be filed with the Securities and Exchange
Commission any or all amendments and post-effective amendments to this
Registration Statement, with exhibits thereto and other documents in connection
therewith, and hereby ratifies and confirms all that said attorney-in-fact or
his substitute or substitutes may do or cause to be done by virtue hereof.

     Signature                    Title                            Date
     ---------                    -----                            -----

/s/                               President and Chief Executive    May 12, 2000
- --------------------------        Officer and a Director
Eddie L. Dunklebarger

/s/                               Chairman                         May 12, 2000
- --------------------------        and a Director
Ernest L. Lowe

/s/                               Director                         May 12, 2000
- --------------------------
Ronald E. Boyer

/s/                               Director                         May 12, 2000
- -------------------------
Samuel E. Cooper

/s/                               Director                         May 12, 2000
- -------------------------
Kenneth L. Deibler

/s/                               Director                         May 12, 2000
- -------------------------
Peter DeSoto

/s/                               Director                         May 12, 2000
- -------------------------
Leon E. Kocher

/s/                               Director                         May 12, 2000
- -------------------------
Ray N. Leidich

/s/                               Director                         May 12, 2000
- -------------------------
Thomas W. Long

/s/                               Director                         May 12, 2000
- -------------------------
Donald L. Miller

/s/                               Director                         May 12, 2000
- -------------------------
Susan K. Nenstiel

/s/                               Director                         May 12, 2000
- -------------------------
Robert W. Rissinger

/s/                               Director                         May 12, 2000
- -------------------------
Allen Shaffer


<PAGE>

/s/                               Director                         May 12, 2000
- --------------------------
Thomas L. Miller

/s/                               Director                         May 12, 2000
- --------------------------
James A. Ulsh

/s/                               Director                         May 12, 2000
- --------------------------
Earl L. Mummert

/s/                               Director                         May 12, 2000
- --------------------------
John W. Taylor, Jr.

/s/                               Director                         May 12, 2000
- --------------------------
Wayne H. Mummert


<PAGE>

                               INDEX TO EXHIBITS


Exhibit Number                               Description
- --------------                               -----------

         4.       2000 Directors Stock Option Plan of the Company.

         5.       Opinion of Mette, Evans & Woodside, General Counsel of the
Company.

        23.a.     Consent of Mette, Evans & Woodside, General Counsel of the
Company - included in Exhibit 5.

        23.b.     Consent of PricewaterhouseCoopers, LLP (Auditors).

        24.       Powers of Attorney included in "SIGNATURES" on page 5.

                                      -8-

<PAGE>

                                  EXHIBIT 4.


                          DIRECTORS STOCK OPTION PLAN
                             COMMUNITY BANKS, INC.
                             ---------------------

1.   Purpose of Plan
     ---------------

     The purpose of this Plan is to enable Community Banks, Inc. (hereinafter
referred to as the "Corporation") to continue to attract and retain nonemployee
Directors with outstanding abilities by making it possible for them to purchase
shares of the Corporation's Common Stock on terms which will give them a direct
and continuing interest in the future success of the Corporation's business.

2.   Definitions
     -----------

     "Corporation" means Community Banks, Inc., a Pennsylvania business
      -----------
corporation.

     "Committee of the Board" means a committee established by the Board
      ----------------------
consisting of three or more members of the Board. The Personnel Committee may be
this committee.

     "Director" means a Director of the Corporation who is not regularly
      --------
employed on a salary basis by the Corporation.

     "Shares" means shares of Common Stock of the Corporation.
      ------

     "Board" means the Board of Directors of the Corporation.
      -----

     "Optionee" means a person to whom an option has been granted under this
      --------
Plan which has not expired or been fully exercised or surrendered.

3.   Limits on Options
     -----------------

     The total number of shares for which options may be granted under this Plan
shall not exceed in the aggregate 200,000 shares. This number shall be
appropriately adjusted if the number of issued shares shall be increased or
reduced by change in par value, combination, or split-up, reclassification,
distribution of a dividend payable in stock, or the like. The number of shares
previously optioned and not theretofore delivered and the option prices therefor
shall likewise be appropriately adjusted whenever the number of issued shares
shall be increased or reduced by any such procedure after the date or dates on
which such shares were optioned. Shares covered by options which have expired or
which have been surrendered may again be optioned under this Plan.

4.   Adjustment of Options
     ---------------------

     The number of shares optioned from time to time to individual Optionees
under the Plan, and the option prices therefor, shall be appropriately adjusted
to reflect any changes in par value, combination, split-up, reclassification,
distribution of dividend payable in stock, or the like.

5.   Granting of Options
     -------------------

     The Board, or if the Board so determines, the Committee of the Board, is
authorized to grant options to Directors pursuant to this Plan during the
calendar year 2000 and in any calendar year

                                      -1-
<PAGE>

thereafter to December 31, 2010, but not thereafter. The number of shares, if
any, optioned in each year, the Directors to whom options are granted, and the
number of shares optioned to each Director selected shall be wholly within the
discretion of the Board or the Committee of the Board. However, no Director
shall be awarded more options for more than 1,000 shares in any year. If the
Board acts, however, it shall do so only upon the advice and recommendation of
the Committee of the Board upon all matters relating to the granting of options
and the administration of this Plan, including determination of the rights and
obligations of the Optionees.

6.   Terms of Stock Options
     ----------------------

     The terms of stock options granted under this Plan shall be as follows:

          (a)  The option price shall be fixed by the Board or the Committee of
     the Board but shall in no event be less than 100% of the fair market value
     of the shares subject to the option on the date the option is granted.

          (b)  Options shall not be transferable otherwise than by will or by
     the laws of descent and distribution. No option shall be subject, in whole
     or in part, to attachment, execution or levy of any kind.

          (c)  Each option shall expire and all rights thereunder shall end ten
     (10) years after the date on which it was granted, subject in all cases to
     earlier expiration as provided in paragraphs (d), (e) and of this Section 6
     in the event a Director ceases to serve as such or dies.

          (d)  During the lifetime of an Optionee, his option shall be
     exercisable only by him and only while a Director of the Corporation or
     within three (3) years after he otherwise ceases so to serve (but in any
     event not later than the end of the period specified in paragraph (c) of
     this, Section 6).

          (e)  If an Optionee dies within a period during which his option could
     have been exercised by him, his option may be exercised within three months
     after his death (but not later than the end of the period specified in
     paragraph (c) of this Section 6) by those entitled under his will or the
     laws of descent and distribution, but only if and to the extent the option
     was exercisable by him immediately prior to his death.

          (f)  If Optionee is removed as a Director for any of the reasons
     specified in Section 1726(b) of the Pennsylvania Business Corporation Law
     of 1988, all options theretofore granted to the Optionee preceding such
     removal shall be forfeited by Optionee and rendered unexercisable.

          (g)  Subject to the foregoing terms and to such additional or
     different terms regarding the exercise of the options as the Board or the
     Committee of the Board may fix at the time of grant, options may be
     exercised in whole or in part from time to time.

7.   Exercise of Options
     -------------------

     No option granted under this Plan may be exercised before the first to
occur of (i) one year from the date of option grant, and (ii) a Change in
Control of the Corporation. Thereafter, options

                                      -2-
<PAGE>

may be exercised in whole, or from time to time in part, for up to the total
number of shares then subject to the option, less the number of shares
previously purchased by exercise of the option.

8.   Change in Control
     -----------------

     For the purposes of this Agreement, a Change in Control with respect to any
Optionee shall be deemed to have occurred when any of the following events shall
have occurred without the prior written consent of such Optionee:

          (a)  An acquisition by any "person" or "group" (as those terms are
     defined or used in Section 13(d) of the Exchange Act, as enacted and in
     force on the date hereof) of "beneficial ownership" (within the meaning of
     Rule 13d-3 under the Exchange Act, as enacted and in force on the date
     hereof) of securities of the Corporation representing 24.99% or more of the
     combined voting power of the Corporation's securities then outstanding;

          (b)  A merger, consolidation or other reorganization of the
     Corporation, except where the resulting entity is controlled, directly or
     indirectly, by the Corporation;

          (c)  A merger, consolidation or other reorganization of the
     Corporation, except where shareholders of the Corporation immediately prior
     to consummation of any such transaction continue to hold as least a
     majority of the voting power of the outstanding voting securities of the
     legal entity resulting from or existing after any transaction and a
     majority of the members of the Board of Directors of the legal entity
     resulting from or existing after a transaction are former members of the
     Corporation's Board of Directors;

          (d)  A sale, exchange, transfer or other disposition of substantially
     all of the assets of the Corporation to another entity, except to an entity
     controlled, directly or indirectly, by the Corporation or a corporate
     division involving the Corporation;

          (e)  A contested proxy solicitation of the Corporation's shareholders
     that results in the contesting party obtaining the ability to cast twenty-
     five percent (25%) or more of the votes entitled to be cast in an election
     of directors of the Corporation; or

          (f)  During any period of two (2) consecutive years during the term of
     this Agreement and any renewal hereof, individuals who at the beginning of
     such period constitute the Board of Directors of the Corporation cease for
     any reason (other than for health, disability or other medical incapacity
     or voluntary retirement) to constitute at least a majority thereof.

9.   Reorganization of the Corporation
     ---------------------------------

     In the event that the Corporation is succeeded by another corporation
or bank in a reorganization, merger, consolidation, acquisition of property or
stock, separation or liquidation, the successor corporation or bank shall assume
the outstanding options granted under this Plan or shall substitute new options
for them.

                                      -3-
<PAGE>

10.  Delivery of Shares
     ------------------

     No shares shall be delivered upon the exercise of an option until the
option price has been paid in full in cash or, at the discretion of the Board or
the Committee of the Board, in whole or in part in the Corporation's Common
Stock owned by the Optionee valued at fair market value on the date of exercise.
If required by the Board. no shares will be delivered upon the exercise of an
option until the Optionee has given the Corporation a satisfactory written
statement that he is purchasing the shares for investment and not with a view to
the sale or distribution of any such shares.

11.  Administration
     --------------

     The Board or the Committee of the Board may make such rules and regulations
and establish such procedures as it deems appropriate for the administration of
this Plan. In the event of a disagreement as to the interpretation of this Plan
or any amendment thereto or any rule, regulation or procedure thereunder or as
to any right or obligation arising from or related to this Plan, the decision of
the Board or the Committee of the Board (excluding, however, the Director(s)
affected by such dispute or disagreement) shall be final and binding upon all
persons in interest, including the Corporation and its shareholders.

12.  Reservation of Shares
     ---------------------

     Shares delivered upon the exercise of an option shall, in the discretion of
the Board or the Committee of the Board, be either shares heretofore or
hereafter authorized and then unissued, or previously issued shares heretofore
or hereafter acquired through purchase in the open market or otherwise, or some
of each. The Corporation shall be under no obligation to reserve or to retain in
its treasury any particular number of shares at any time, and no particular
shares, whether unissued or held as treasury shares, shall be identified as
those optioned under this Plan.

13.  Amendment of Plan
     -----------------

     The Board may amend this Plan from time to time as it deems desirable.


14.  Termination of the Plan
     -----------------------

     The Board may, in its discretion, terminate this Plan at any time prior to
December 31, 2010, but no such termination shall deprive Optionees of their
rights under their options.


15.  Effective Date
     --------------

     This Plan shall become effective on January 2, 2000, and options hereunder
may be granted at any time on or after that date.

                                      -4-

<PAGE>

                                   EXHIBIT 5

                              Opinion of Counsel

Community Banks, Inc.
150 Market Square
Millersburg, PA 17061

Re:      Community Banks, Inc. 2000 Directors
         Stock Option Plan Form S-8 Registration

Gentlemen:

This opinion is rendered in connection with the Registration Statement filed on
Form S-8 with the Securities and Exchange Commission under the Securities Act of
1933, under which up to 200,000 shares of common stock of Community Banks, Inc.
("Community"), par value $5.00 per share, are to be registered pursuant to the
2000 Directors Stock Option Plan adopted by Community's Board of Directors and
Shareholders.

We have reviewed the corporate proceedings relating to the proposed stock
offering and such other legal matters as we have deemed appropriate for the
purpose of this opinion. Based on the foregoing, and assuming all necessary
shareholder and governmental approvals, we are of the opinion that the shares of
common stock covered by the aforesaid Registration Statement will, when issued
in accordance with the terms set forth in the Prospectus, applicable law and the
Bylaws of Community, be validly issued, fully paid and nonassessable by
Community.

We hereby consent to the filing of this opinion as an Exhibit to the
aforementioned Registration Statement.

                                                  Very truly yours,

                                                  METTE, EVANS & WOODSIDE


                                                  By  /s/ Bradley A. Walker
                                                    ----------------------------
                                                      Bradley A. Walker, Esquire

<PAGE>

                                 EXHIBIT 23.b.

                      CONSENT OF INDEPENDENT ACCOUNTANTS


We consent to the incorporation by reference in this registration statement on
Form S-8 of our report dated January 20, 2000, on our audits of the consolidated
financial statements of Community Banks, Inc.

                                                 /s/ PricewaterhouseCoopers, LLP
                                                 PricewaterhouseCoopers, LLP

Harrisburg, Pennsylvania
May 17, 2000


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